A negative effective financing rate indicates that an MNC: paid only a small amount in interested...

A negative effective financing rate indicates that an MNC:

		paid only a small amount in interested over and above the amount borrowed.
		has been negatively affected by a large appreciation of the foreign currency.
		actually paid fewer dollars to repay the loan than it borrowed.
		would have been better off borrowing in the U.S.

Solutions

Expert Solution

Negative effective financing rate indicates that home currency has appreciated and those companies who have borrowed outside the domestic territory will be having higher amount to pay because their domestic currency has appreciated in respect to the foreign currency and they would have been better off borrowing in United State.

Correct answer will be option (d) would have been better off borrowing in United State.

jeff jeffy answered 2 years ago

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